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Monday, February 25, 2008

What else could FF have done with that 30 grand?

Paying back money is a complicated business at the best of times. Most of us lending a tenner to a mate would simply expect the tenner back at some point but were we to lend the same person a few grand to start a business that makes it big or even back a horse that ends up coming in at long odds we would not be completely unreasonable to expect something more in return that the principal. That in part is why interest exists because someone else is doing something profitable with your money, you are in turn not able to do a similarly profitable thing. There is a name for it that escapes me at present.

Now the trustees of FF in Dublin Central must surely have had a duty of care to their members to ensure that their interests were protected in any financial dealings they had. Not to be leaving their hard fund raised cash lying about the back of a car or not to be backing 3 legged horses. Their money had to be kept safe and yet relatively liquid after all you never know when an election might happen. Lending someone money to buy a house who it seems was not able to borrow this money from a bank (after all that would have been the natural first port of call for most of us wouldn't it?) would appear to mean that person would not be able to get that money back in a hurry if it was needed so this was not the most liquid investment. And then there is the apparent absence of any loan agreement which means the transfer was not very secure, after all in the absence of any paper work it would be entirely possible for Ms. Larkin to claim the money was a gift or charitable donation, a dig out if you will.

Now what other options did the FFers have well. If say the FF organisation in Dublin Central had bought the house and then continued to rent the place out to the aunty Larkin's it would have solved their immediate accommodation crisis while also ensuring that any increase in property values would have accrued to the people who had provided the principle. Instead Ms Celia Larkin is the sole individual to benefit from this transaction in terms of capital appreciation and all for the sum of 30K plus what 30K might have earned resting in a regular bank account. I wonder if Ms. Larkin charged her aunts rent, if she was registered as a landlord, if they claimed for rent relief or rent allowance from their tax/pensions? All interesting avenues of investigation I'm confident that members of the fourth estate are pursuing as I write.

And just imagine if you will how much more secure the FF organisation in Central would be if they had taken my hypothetical advice above and now had a property worth at least 500K instead of 30K plus bank interest which is what they have. Rather than the €115, yes €115, on deposit that some are now claiming they have post the election.